Providing Advanced Medical Technology Inspiration Healthcare Group - PowerPoint PPT Presentation

Providing Advanced Medical Technology Inspiration Healthcare Group plc Full Year Results Presentation – year ended 31 January 2019

Disclaimer While the information contained herein has been prepared by Inspiration Healthcare Group plc  (“Inspiration”) in good faith, neither it nor any of its directors, officers, agents, advisers, affiliates or employees makes any representation or warranty, express or implied, nor shall any of them have any responsibility whatsoever in respect of the accuracy or completeness of, or omissions from the contents of this document or any other document or information, written or oral, supplied at any time or in respect of any opinions or projections expressed herein or omitted there from. No responsibility is accepted, and any and all responsibility and liability is expressly disclaimed, by  Inspiration and its directors, officers, agents, advisers, affiliates or employees for any errors, miss- statements, misrepresentations or omissions in this document or any other such document or information supplied at any time to the recipient or its advisers in the course of the recipient’s evaluation of Inspiration. Any forward looking information contained in this document is based on subjective estimates and  assumptions made by representatives of Inspiration and about circumstances and events that have not yet taken place. Such estimates and assumptions involve significant elements of subjective judgement and analysis which may or may not be correct. Accordingly, no representations are made as to the accuracy of such information and there can be no assurance that any such projected results will be attained or outcome realised. Neither Inspiration, nor any of its subsidiaries, affiliates, representatives, partners, directors, officers,  employees, advisers or agents has any authority to make or give any representation or warranty whatsoever in relation to Inspiration or the prospects of Inspiration and makes no such representation or warranty. This document does not constitute or form part of any offer for the sale of shares, business or assets of  Inspiration nor shall it constitute the basis of any contract which may be concluded for the sale of the shares, business or assets of Inspiration. 2

About Us A Medical Technology Company, founded in 2003, 4 founders are still with the business  Grown profitability for 15 years, cash generative  2018 Revenue - £15.5m and EBITDA 1 of £1.65m  Transitioned from UK distributor to global provider of neonatal and patient warming products  Products sold to every NHS Neonatal Intensive Care Unit (NICU) approx. 200  Actively selling products in over 50 countries through over 75 distributors  Strong management knowledge of the market  Synergistic product ranges add value to customers  1 Earnings Before Interest, Tax, Depreciation, Amortisation and share based payments 3

Our Products – the first 6 hours of life Tecotherm Neo Used in NICU. Small but powerful features, it has been LifeStart AlphaCore5 Controller used to show benefits of cooling to reduce Used in the Delivery Room. brain injury Used in Operating Theatre / Delivery Novel device allows assessment of the Launched: Mid 2012 Room and NICU. Low power usage, low newborn before the umbilical cord is cost of ownership, flexible configuration clamped and facilitates bedside of pads stabilisation and resuscitation Launched: Mid 2018 Launched: Late 2017 Inspire rPAP System Used in the Delivery Room or NICU. Unique+ CFM Highly efficient delivery of Used in NICU to assess the newborn stabilisation and resuscitation brain. Small lightweight and software breaths to premature and sick babies can be used on laptops for portability Launched: Late 2017 Launched: Early 2018 Inspire nCPAP Used primarily in the NICU. Established therapy for longer term non-invasive respiratory support for premature and sick babies Launched: Early 2010 4

Highlights – year ended 31 January 2019 £ Launched the new Patient Largest ever order for Patient Sales of new products generated Warming System Warming Systems revenues of £1.4m MDSAP ----- Inspiration Healthcare ------------- ------------- Signed licence agreement for Received MDSAP certification for Project Wave 4 countries plus ISO13485:2016 Appointed a new distributor in Strengthened management Winners of the 2019 Queen’s USA structure with new Head of Award for Enterprise Operations (International Trade) 5

Growth & Increased Regulation Medical Device Unannounced Medical Device Single Audit Medical Device PIP Breast Regulatory ISO13485: 2016 ISO13485:2016 Regulation (EU) Programme Regulation (EU) Implant Founder Audits published (Feb compulsory from published (May compulsory for compulsory from Arrested 2012 Recommended 2016) March 2019 2017) Canada from Jan May 2020 (Sept 2013) 2019 £15.5M £15.5M £14.3M £13.1M £9.5M £8.8M £8.0M £6.9M £6.0M 2011 2012 2013 2014 2015 2016 2017 2018 2019 6

Financial Highlights and KPI’s – YE January 2019 Highlights  Revenue stable at £15.5m – impact of regulatory environment  Record international revenue at £5.4m, strong growth in US  9% of total revenue came from new products  EBITDA 1 growth of 13% to £1.65m  Operating profit in line with expectations at £1.2m  Strong cash position at £2.5m (no debt) KPIs  Group revenues : — Inspiration Branded Revenue: £7.2m, increased from 44.8% to 46.4% of revenue — International Sales Growth: 12% to £5.4m, now 35% of total revenue (2018: 31%)  Gross margin: 45.5% (2018: 43.9%) from improved product mix  EBITDA 1 margin: 10.7% up from 9.4%, due to improved GP and tight control of cash-based overheads  Underlying EPS 2 decreased 1.7% to 3.40 pence (2018: 3.46 pence), due to slightly higher tax charge  Investment in R&D 4.1% of revenue (2018: 6.2%), target is c.6% 1 Earnings before interest, tax, depreciation, amortisation and share based payments 2 Adjusted to exclude significant prior year tax amendments 7

Consolidated Income Statement FY2 Y2018 FY2 Y2019 Comments £’00 000 £’00 000 Revenue 15,495 15,487 Solid result given continued  regulatory headwinds Gross Profit 6,786 7,042 Increased 4% despite level  sales gross profit margin 43.8% 45.5% Growth of 13% EBITDA 1,454 1,648  EBITDA margin 9.4% 10.6% Operating profit 1,204 1,213 In line with expectations  Profit before tax 1,202 1,219 Taxation 21 -116 Effective tax rate 13.5%  (FY2018: 13.5%); lower prior year recovery Profit after tax 1,223 1,103 Small decline due to higher  tax charge Basic EPS 3.99p 3.60p Extracted from the audited financial statements for the year ended 31 January 2019 8

Consolidated Cash Flow FY2 Y2018 FY2 Y2019 Comments £’00 000 £’00 000 Cash generated from operations 919 995 Interest paid -2 - Higher charge due to lower  Taxation paid -126 -147 R&D tax credits Taxation received 161 - Prior year recovery  Net cash generated from operating activities 952 848 Cash flows from investing activities: Held back by delayed CE  Interest received - 6 mark certificates and Capex – capitalised development costs -688 -276 prolonged negotiation for Project Wave Capex – PP&E and other intangibles -322 -125 Prior year included new  head office spend Other -21 - Net increase/(decrease) in cash and cash equivalents -79 453 Cash and cash equivalents at the year end 2,086 2,539 9

Consolidated Balance Sheet Comments 31 31 January 31 January 31 2018 20 2019 20 £’00 000 £’00 000 £1.2m capitalised  Intangible assets 1,209 1,293 development NBV PPE 461 408 NeuroprotexeonLtd  Investments 111 111 Spend largely offset by Total non-current assets 1,781 1,812  depreciation Strong cash position, no Cash 2,086 2,539  debt Other Current Assets 3,626 3,825 Total Liabilities -3,128 -2,643 Net Assets 4,365 5,533 10

Revenue Generation – Core Business Critical Care Operating Theatre Home Healthcare Capital Capital Capital Consumables Consumables Consumables Tech Support Tech Support Tech Support Own Brand Own Brand Distributed Distributed Distributed Domestic Domestic Domestic International International 11

Revenue Breakdown – Sector and Ownership Critical Care Operating Theatre Home Healthcare Market Sector 69% 11% 20% £10.7m £1.7m £3.1m Branded Products Distributed Products Technical Support Product Ownership 46% 41% 11% £7.2m £6.3m £1.7m Excludes freight revenue 2%, £0.3m 12

Revenue Breakdown - Geography Domestic Asia Pacific Distribution Partners 65% 2%  Direct sales in UK and Ireland (“Domestic”)  NHS Trusts  Private healthcare providers  Distribution network covering over 50 countries  Strong growth in US in FY2019  14 distributors > £100k accounting for 61% of international revenue Americas 9%  Top 50 distributors account for 88% of international revenue  No one distributor accounts for more Europe Middle East & Africa than 6% of total revenue 19% 5% 13